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Microsoft
Microsoft's Efficiencies

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By MichaelRead
July 23, 2001

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Filcro:

I don't know if this answers your question and it is OT, yet I had to describe profit to a Russian company whose people had been inculcated with the belief that profit was robbery.

It was an engineering company that wanted to sell its products in the West and, when we got to price, I got to the part on gross and net profit and the room got quiet. Even my translator looked dour. I was told that my profit percentage was too high and should be reduced. So I asked, "What's the worst piece of machinery you have on the production floor?" and was told it was a boring machine. I asked, "How much will it cost to replace it with the best that's available?" and I was told it would be about a quarter of a million American dollars (this from a roomful of brilliant engineers earning about $100 a month). I said, "We buy one from profit," and they said my profit percentage was too low.

Why I'm writing this is because you triggered something and it also relates to those posters saying that Microsoft's profit margins are too high. Too high for what? And too high compared to what?

The profit margin comes from efficiencies within the system that are plowed back into the system to create further efficiencies. This is an essence of capitalism; what I saw in Russia was machinery years out of date being maintained brilliantly... but at great cost of personnel value. Ingenuity par excellence, but time and effort consuming.

Linux's system is not communistic, it's communalistic. Nothing wrong with that, yet it is sustained only by those interested in it, and their interest is not secured by anything other than interest. I have to ask, "Where is the profit that can be put back into the system to make it more efficient?"

I can fully understand the interest and the captivation working with a language that holds such promise. However, I see Unix when I see Linux. Linux supercedes Unix since it is better, yet a model that depends on interest is faced with the same as interest in Unix: it is now lesser because of Linux.

I disagree that the interest in Linux is sufficient for it to supercede MSFT. MSFT is plowing millions of profit back into the system. This has to have an effect. An effect that Linux lacks no matter how much 'interest' in it.

MichaelR